* Nomura's new mutual fund investing in high ROE firms in focus * Takeda tumbles on weaker-than-expected profit forecast * Machinery data has limited impact on market By Ayai Tomisawa TOKYO, May 18 (Reuters) - Japan's Nikkei share average rose on Monday morning to a 2-1/2-week high, bolstered by gains in the insurance sector after Dai-ichi Life announced higher shareholder payouts.

The Nikkei 225 gained 0.5 percent to 19,828.65 after rising as high as 19,849.75, its loftiest level since April 30.

Dai-ichi Life soared 10.4 percent to a record high of 2,194.5 yen after saying it will set a total shareholder return ratio at 40 percent in the mid-term. It also said it will by back up to 10 million yen of its shares worth up to 15 billion yen.

"Investors finally started looking to domestic catalysts after worries about volatility in global bond markets receded," said Hikaru Sato, a senior technical analyst at Daiwa Securities.

The Dai-ichi news rubbed off on other insurers, with Tokio Marine Holdings rising 1.6 percent and T&D Holdings surged 4.5 percent.

Sato said the market is also focused on a launch on Monday of a large mutual fund by Nomura Securities.

The size of the mutual fund, which focuses on Japanese equities with higher shareholder returns such as higher return on equity, is expected to be more than 50 billion yen, traders said.

Nomura declined to comment on the size.

Exporters were among the main gainers in early trade. Honda Motor Co rose 0.9 percent, Panasonic Corp added 0.9 percent and Canon Inc advanced 0.8 percent.

Bucking the broader market, Takeda Pharmaceutical tumbled 4.3 percent after the drugmaker issued disappointing operating guidance for fiscal year ending March 2016, coming on top of a net loss of 145.7 billion yen for the year ended March.

It was hit by a $2.7 bln charge to settle claims involving Actos diabetes drug in the U.S. after being accused of failing to warn users the drug could raise the risk of bladder cancer.

Japan's core machinery data announced before the market open had a limited impact on the market. Machinery orders grew in March for the first time in two months but they are seen slipping in the current quarter, suggesting that weak capital spending could further sap momentum from an economy struggling to rebound from a recession.

The broader Topix gained 0.7 percent to 1,617.64 and the JPX-Nikkei Index 400 rose 0.7 percent to 14,618.08.

(Editing by Shri Navaratnam)